There’s a time-honored disaster administration technique, whereby one says nothing and waits for the outrage to go. For Sequoia Capital, the technique labored fairly nicely this week. Whereas associate Shaun Maguire initially weathered criticism over an inflammatory social media submit, that preliminary indignation cooled shortly. Now, some appear to suppose that Maguire’s defiant stance might even be strengthening his place. Enterprise Insider really referred to as it “good for deal flow” — controversy as aggressive benefit.
Sequoia’s calculated gamble carries actual threat, although. One other provocative submit from Maguire that hits the mistaken nerve, a shift in political winds, or escalating penalties might shortly rework their unflappable associate from an asset right into a legal responsibility the agency can now not afford to disregard.
A disaster communications skilled who has managed fame disasters for dozens of main manufacturers tells this editor, “Corporations like Sequoia are bulletproof till they aren’t.”
What occurred
Sequoia’s hands-off method was put to the check earlier this week when the storied enterprise agency discovered itself within the eye of a storm over Maguire’s inflammatory feedback about New York Metropolis mayoral candidate Zohran Mamdani. Maguire referred to as him an “Islamist” who “comes from a tradition that lies about every part” in a July 4th tweet on X that has since been seen greater than 5 million occasions. A couple of thousand signatures have poured in since on a petition demanding that Sequoia condemn the remarks, examine Maguire’s conduct, and apologize.
There’s been numerous speak about why Sequoia hasn’t finished this, with many retailers noting that Maguire isn’t simply any associate. This standing owes partly to his friendship with Stripe’s co-founder. Based on studies, at a 2015 Founders Fund occasion, Maguire—then a Founders Fund-backed entrepreneur—defended Collison throughout an argument with Anduril’s Palmer Luckey about quantum computing, incomes Collison’s friendship. The connection proved beneficial when Maguire joined Google Ventures in 2016; he helped safe a $20 million Stripe funding throughout his first week. When Maguire left Google Ventures in 2019, Collison personally beneficial him to Sequoia’s companions. (Stripe has been in Sequoia’s portfolio since 2010, with the agency investing greater than $500 million over 15 years.)
Maguire additionally led Sequoia’s funding in Bridge, a stablecoin platform that Stripe acquired for $1.1 billion, and is reportedly Sequoia’s hyperlink to Elon Musk, although that is in all probability considerably overstated. Musk and Sequoia’s international managing director, Roelof Botha, are each native South Africans and have recognized one another for greater than 25 years, relationship again to their time collectively on the then-nascent PayPal, the place Botha was recruited personally by Musk.
Regardless of that lengthy relationship, the 2 haven’t at all times seen eye to eye. Botha was extremely crucial of Musk’s administration type when Musk was CEO of the merged X.com/PayPal firm, the place Botha was CFO. Botha once told veteran journalist Ebbe Dommisse, “I feel it might have killed the corporate if Elon had stayed on as CEO for six extra months. The errors Elon was making on the time had been amplifying the danger of the enterprise.” However Musk was at odds with just about that complete crew on the time, and people tensions have lengthy since been resolved.
The larger level right here: if you’re managing tens of billions of {dollars} in belongings and your agency’s fame rests on backing winners like Google, Stripe, and Nvidia, you don’t simply solid apart a rainmaker.
In the meantime, Maguire’s conduct suggests he’s not backing down. After issuing a 30-minute video on X final weekend by which he apologized for offending so many — saying he was making some extent a few political ideology and never one a few faith — he has doubled down with more and more aggressive posts this week. He has claimed he has “reverse engineered” his critics’ “command construction” and threatened to “embarrass” anybody who escalates towards him. He added that that is him at “1% throttle” and warned individuals to not “fuck w youngsters of the web.”
The silent remedy
Sequoia has precedent for its method to this example. The agency has traditionally given its companions house to precise themselves publicly, with figures like Doug Leone and Michael Moritz (who left the agency in 2023) representing completely different political views.
However there’s a vital distinction between political range and inflammatory rhetoric and clearly to some, Maguire’s feedback prolong past partisan politics into territory that alienates each political opponents and potential enterprise companions.
It’s additionally value remembering that even for Sequoia, there’s a brilliant line. Michael Goguen, one other, earlier rainmaker with the agency, was promptly proven the door when Sequoia realized of a sexual abuse lawsuit filed towards him. The conditions are hardly comparable; Goguen’s points had been authorized and private, not ideological. On the identical time, Sequoia has proven it isn’t keen to circle the wagons at any value, not if its fame is at stake.
Presumably, a number of elements inform Sequoia’s do-nothing PR technique, together with how shortly individuals, confronted with a relentless flurry of stories, transfer on from a scandal. The agency can be working in a distinct political panorama proper now within the U.S. Together with Donald Trump’s victory and the rollback of DEI initiatives has come new tolerance for controversial speech. What might need been career-ending at an earlier time limit is now weathered extra simply.
The agency can be seemingly banking on the truth that whereas founders need companions who match the normal, extra genteel VC mildew, they need profitable ones much more. Startups being courted by a number of top-tier companies may not like or agree with Maguire, however when Sequoia comes calling with its observe report and virtually bottomless pockets, most founders are going to welcome the agency with open arms.
There’s additionally the very actual risk that Sequoia is engaged on a contingency plan. (Sequoia declined to touch upon Maguire’s posts when reached by TechCrunch earlier this week.)
Nonetheless, Sequoia’s silence carries dangers. Not all of the signers have been confirmed, however the petition towards Maguire contains the names of some outstanding Center Japanese executives and founders who’ve attested to signing it, they usually symbolize the sort of numerous, international expertise pool that drives innovation. By not addressing the controversy, Sequoia dangers being seen as tacitly endorsing Maguire’s views.
Put one other manner, although the enterprise capital world has traditionally been remarkably forgiving of controversial figures with distinctive deal move, the agency is playing with its fame in an more and more related international market the place alienating complete areas and communities carries actual enterprise penalties.
Whether or not that guess pays off will rely upon how lengthy the controversy lingers, how a lot enterprise it really prices Sequoia, and whether or not Maguire can resist the urge to push issues previous Sequoia’s personal tolerance threshold. (He has stated he doesn’t submit something that hasn’t been “excrutiatingly thought out.”)
Historical past means that established monetary companies with sturdy observe data are inclined to outlive their scandals, even severe ones. When Apollo World Administration’s Leon Black resigned in 2021 over his $158 million funds to Jeffrey Epstein, the agency’s inventory barely moved and shareholders appeared largely unfazed. Apollo simply continued its aggressive deal-making underneath new management.
Equally, Kleiner Perkins survived Ellen Pao’s high-profile gender discrimination lawsuit in 2015. But it surely took years and basically a completely new group for the storied enterprise agency to regain its footing in Silicon Valley’s hierarchy. The lesson right here could also be that whereas controversial companions may be endured, the restoration timelines can range considerably relying on how companies deal with the disaster.
For now, the disaster communications skilled, who requested to not be named, has some recommendation for Maguire and, by extension, Sequoia. Relating to the video Maguire printed within the aftermath of his preliminary feedback, the knowledgeable stated, “I did suppose that apology addressed the ambiguities in [Maguire’s] submit. But it surely’s a 30-minute video — you must be actually to observe this.”
If there’s a subsequent time, the skilled stated, Maguire ought to “do two movies — one for 3 minutes” and one other, longer video, for anybody who needs to maintain watching.
Generally, the knowledgeable added, “much less is extra.”